Investors Hope to Enter Colorado Marijuana Market

Colorado has come a long way in recent years.

Investors are excited by Colorado’s proposed changes to their recreational marijuana laws. As the state that started the green revolution, Colorado understands the challenges and risks of a recreational market. At first, the state wanted to ensure that the established medical marijuana community was protected from the financial machinations of outside interests. Specific protections were included in the legislation that ensured mom-and-pop marijuana producers had a chance to compete.

These protections mainly took the form of restrictions on who could become a licensed producer in the state. Only people, not corporations or other business entities could apply for a license, and there were additional limits on who those people could be. Prospective canna-investors had to have 2 years of residency established in addition to all other restrictions.

But over the last few years, many of those restrictions have eased. Most notably when the residency requirements were reduced to only one year. But new states joining the revolution have put enough pressure on the state they are looking to keep growth high.

California changes the landscape.

Continuing cannabis reform is a positive for the entire industry. But that reform can have localized consequences that make states like Colorado reevaluate their policies. With California throwing its economic weight into the recreational mix, other states can’t compete. Potential talent, businesses and investors understand that the sheer size of California’s economy eclipses every other state combined.

So Colorado is looking to make itself more attractive. Colorado Representative Dan Pabon feels that the best move is to open the state to outside investors. So he and three other members of the House sponsored HB1011. He explained the impetus for introducing the legislation by saying, “With the advent of California and Oregon and other states coming online, there’s much more competition for capital investment and financial resources. … We didn’t want Colorado to be left behind in any way.”

The biggest change from the new legislation is the removal of investor limits. If the bill passes, an unlimited number of investors can enter the Colorado cannabis industry. Investors may also be non-humans like corporations or other organizations. Something the current law strictly prohibits. But legislators believe the potential benefits of the changes could outweigh the costs it incurs.

Advocates aren’t sold on the idea yet.

Legislators aren’t the only ones saying the move is a good idea. Colorado-based Marijuana Industry Group executive director Kristi Kelly said “This legislation will ensure that Colorado maintains its position as a leader in the cannabis industry by leveling the playing field with the other states that do not prohibit publicly traded company participation in the industry,” He drove home his point by finishing with “It’s crucial to open up this option to businesses of all sizes, with the appropriate guardrails to maintain the integrity of our regulated businesses. New access to capital benefits small and large businesses alike. Colorado is the only place where this prohibition exists.”

But the executive director of the Colorado branch of NORML, Ashley Weber, says her organization has mixed feelings on HB1011. She told reporters “It’s a little to early to say what our organization feels,” And she finished up by saying, “As of now, I think we’re neutral on this issue.” Weber believes that the important part is how the transition is handled. She feels that opening up investing could be the “rise or ruin” of the state’s legal weed industry.

Weber explained further that the move isn’t explicitly bad for consumers and small businesses. She believes “this could improve cannabis in Colorado, and therefore, our cannabis consumers could benefit from lower prices and better quality-controlled cannabis.” She also noted a lack of research on the possible consequences of the legislation and urged further investigation.

Opening the state could cost more than expected.

One of the agencies most affected by the changes is the Marijuana Enforcement Division of the Colorado Department of Revenue. The agency would need to get more funding for things like background checks and travel expenses. Since investigators have to check out anyone holding 5% or more of the shares in a cannabis company, allowing an unlimited number of moneyed interests to jump in could be overwhelming.

But the cost of investigating shadowy investors across the globe is inconsequential compared to the potential wealth HB1011 entices to Colorado. Mainly because the bill would make it a lot easier for a cannabis company to break into the major exchanges like the NASDAQ. But Wall Street is notorious for extracting wealth from industries, not for building roads or funding schools like current cannabis businesses do.

In the end, there will be winners and losers with most of the losers likely being the small businesses and public services. But there is potential benefits for consumers and businesses able to attract investors. Only time will tell if the Colorado legislature can see past the mountains of money to protect their constituents from foreign and domestic investors looking to make a profit above all else.

What do you think allowing foreign investors would to enter the marijuana market will do? Do you think Colorado should have made the switch years ago? Who do you think will be the winners and losers in this situation? Let us know in the comment section!

Adam is a glass collector, entrepreneur, artist, and fine cannabis connoisseur who loves to be engaged in creative projects and scientific research. He specializes in producing cannabis related content on a variety of platforms. Adam loves connecting with the cannabis community and collaborating with creators and businesses.

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